AMENDMENT TO UK FINANCIAL SERVICES BILL PROVIDES REGULATION FOR CRYPTO ACTIVITIES

Last updated: June 19, 2025, 18:55 | Written by: Ari Paul

The UK is taking significant strides towards establishing a robust regulatory framework for the burgeoning cryptoasset market. It was a pleasure to give evidence to the House of Commons Financial Services Markets Bill Committee today, answering questions from @griffitha @TulipSiddiq and @MartinJDocherty on UK regulatory competitiveness, crypto-assets and stablecoin.The recent amendment to the Financial Services and Markets Bill, now making its way through Parliament, signals a pivotal moment, empowering the Financial Conduct Authority (FCA) to regulate a wide spectrum of crypto activities. The Financial Services and Markets Act 2025 (Carrying on Regulated Activities by Way of Business) Order 2025 is amended to include the new Chapter 2B regulated activities.This move aims to provide clarity and consumer protection, fostering innovation within a well-defined legal perimeter.This isn't just about controlling the 'Wild West' of crypto; it's about creating a secure and trusted environment where digital assets can thrive. The draft statutory instrument will bring crypto companies operating in the UK under the remit of the Financial Services and Markets Act 2025, following a 2025 Treasury consultation that proposedThe proposed legislation will require FCA authorization for most crypto activities, including stablecoin issuance and crypto custody, impacting firms serving or marketing to UK retail customers, regardless of their location.Businesses must prepare for sweeping compliance changes as the UK moves towards a more structured and supervised crypto ecosystem.Understanding the implications of this amendment is crucial for businesses and individuals alike, as it will reshape the future of crypto in the UK.It's more than just a bill; it's a new era for digital finance in the United Kingdom.

Understanding the Financial Services and Markets Act 2025 (FSMA) and Cryptoassets

The Financial Services and Markets Act 2025 (FSMA) serves as the cornerstone of the UK's financial services regulatory framework. Anna is a lawyer at CMS London and a member of the firm s Crypto Digital Assets and Financial Services Regulation teams. Anna also sits on the executive committee for the Financial Services Lawyers Association. She was involved in producing a multijurisdictional guide to cryptoasset regulations, with a focus on a broad range of EUAs the core legislation, FSMA provides the foundation upon which the government can build specific regulations for emerging technologies and asset classes like cryptoassets. The proposed rules rely on the foundation set by the Financial Services and Markets Act, that passed into law in 2025 and gave the Treasury the ability to draft new regulations for the crypto sector. One of the key features of the draft legislation is that it introduces new regulated activities under the Financial Services and Markets Act 2025The recent amendment leverages FSMA to bring a wide range of crypto activities within the regulatory perimeter. Our blog, Global Regulation Tomorrow offers a convenient resource for those keeping track of the evolving and increasingly complex global financial services regulatory environment. It reports on financial services regulatory developments and provides insights and commentary across Africa, Asia, Australia, Canada, Europe and the United States.This includes activities previously operating in a less defined space, such as staking and crypto lending.

The power granted to HM Treasury under the FSMA 2025 Amendment represents a significant policy shift.It empowers the Treasury to create and enforce regulations specific to cryptoassets, addressing the unique risks and opportunities presented by this evolving sector.This ensures a more tailored approach compared to applying existing financial regulations designed for traditional assets.

Key Components of the Amendment

Expansion of Regulatory Perimeter: The amendment broadens the scope of regulated activities to encompass a wider range of cryptoasset activities.
FCA Authorization: Most crypto activities will require authorization from the FCA to operate legally in the UK.
Financial Promotions Regulation: The law extends its powers to regulate financial promotions, ensuring that crypto advertisements are fair, clear, and not misleading.
Focus on Stablecoins: The bill specifically addresses stablecoin regulation, recognizing their potential role in payments and financial stability.

The Draft Order: Defining Regulated Cryptoasset Activities

On April 29th, 2025, HM Treasury published a draft statutory instrument, the Financial Services and Markets Act 2025 (Regulated Activities) (Amendment) Order 2025 (the Draft Order).This Draft Order proposes a broad extension of the UK’s financial services regulatory perimeter, bringing a wide range of cryptoasset activities within scope. UK financial services bill targets crypto regulations The amendment of this bill was written by Andrew Griffith, a Member of Parliament and Financial Secretary to the Treasury. The bill comprisesIt makes amendments to the Financial Services and Markets Act 2025 (Regulated Activities) Order 2025 (the RAO).

The Draft Order introduces new regulated cryptoasset activities, providing much-needed clarity on which activities will fall under the FCA's supervision. The bill addressed stablecoin regulation from the start; now the Financial Conduct Authority will be empowered to regulate activities with crypto assets if the amended bill passes. An amendment to the Financial Services and Markets Bill now before the United Kingdom s Parliament would extend the law s powers to regulate financial promotionThis clarity is essential for businesses operating in the crypto space to understand their compliance obligations and ensure they are operating within the legal framework.

Examples of New Regulated Cryptoasset Activities:

Issuance of Stablecoins: Firms issuing stablecoins will need to comply with specific regulations designed to ensure their stability and redeemability.
Crypto Custody Services: Providing custody services for cryptoassets will require authorization and adherence to robust security standards.
Crypto Lending and Borrowing: Platforms facilitating crypto lending and borrowing will be subject to regulations addressing risk management and consumer protection.
Staking: Activities related to staking, especially on proof-of-stake blockchains like Ethereum and Solana, will be regulated. The draft Order makes consequential amendments to other instruments including the Financial Services and Markets Act 2025 (Financial Promotion) Order 2025 (S.I. 2025/1529) (the Financial Promotions Order )), to make sure that wholly new regulated activities relating to cryptoassets (such as staking) are in scope of the financial promotionsThe Treasury’s updated framework provides legal clarity for staking, exempting it from the scope of collective investment schemes (CIS), which are subject to strict oversight.

Implications for Crypto Businesses: Preparing for Compliance

The amendment to the Financial Services and Markets Bill has significant implications for crypto businesses operating in or targeting the UK market.Firms should begin preparing for sweeping compliance changes to ensure they can continue operating legally and effectively.

One of the most significant changes is the requirement for FCA authorization. Congress just introduced the Crypto Market Bill, the CLARITY Act of 2025, promising long-awaited regulatory clarity for digital assets. R Tamara de Silva provides a comprehensive analysis, breaking down key provisions and their impacts on crypto exchanges, stablecoins, and decentralized finance. Essential reading for stakeholders in the digital asset space, including legal, compliance, andFirms offering crypto services to UK retail customers, regardless of their location, must be authorized in the UK.This means going through a rigorous application process, demonstrating compliance with regulatory requirements, and maintaining ongoing compliance.

Actionable Steps for Crypto Businesses:

Assess Current Operations: Evaluate your current crypto activities and identify which ones will fall under the new regulatory regime.
Seek Legal Counsel: Engage with legal experts specializing in crypto regulation to understand your specific compliance obligations.
Prepare for FCA Authorization: Begin gathering the necessary documentation and preparing your application for FCA authorization.
Review Risk Management Frameworks: Ensure your risk management frameworks are adequate to address the specific risks associated with cryptoassets.
Develop Compliance Programs: Implement robust compliance programs to monitor and enforce adherence to regulatory requirements.
Train Employees: Provide comprehensive training to employees on the new regulatory landscape and compliance procedures.

Addressing Group Structure Complexities

Businesses offering crypto services through separate entities may need to rethink how they manage risk, governance, and oversight across regulated and unregulated parts of the group.The FCA will likely scrutinize the interconnectedness of these entities to ensure that risks in the unregulated parts of the group do not negatively impact the regulated entities.

Crypto Financial Promotions: Ensuring Consumer Protection

The amendment to the Financial Services and Markets Bill also extends the law’s powers to regulate financial promotions. UK Government Adds New Crypto Amendment In Finance Regulation Bill. Samuel Edyme . The UK s Financial Services and Markets bill published an amendment paper on Friday, portraying that the UK government is seeking to regulate crypto and ban unauthorized service providers.This is a critical step in protecting consumers from misleading or deceptive marketing practices in the crypto space.

Under the new regulations, all crypto financial promotions targeted at UK consumers must be fair, clear, and not misleading. The UK government has taken steps to introduce regulatory policies that will oversee cryptocurrency promotions and other crypto-related activities. An amendment proposal to the Financial Services and Markets Bill presented by Member of Parliament and Financial Secretary to the Treasury, Andrew Griffith, has called for the extension ofThis includes advertisements on social media, websites, and other channels.The FCA will have the power to take enforcement action against firms that violate these rules.

Key Requirements for Crypto Financial Promotions:

Clear and Prominent Risk Warnings: All crypto financial promotions must include clear and prominent risk warnings highlighting the potential for losses.
Fair and Balanced Information: Promotions must present a fair and balanced view of the cryptoasset, including both the potential benefits and risks.
Accurate and Verifiable Information: All information presented in the promotion must be accurate and verifiable.
Compliance with Advertising Standards: Promotions must comply with general advertising standards, including rules against misleading claims and deceptive practices.

The Role of the Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) will play a central role in regulating crypto activities under the amended Financial Services and Markets Bill.The FCA will be responsible for authorizing firms, supervising their activities, and enforcing compliance with regulatory requirements.

The FCA has already demonstrated its willingness to take a proactive approach to regulating cryptoassets, issuing warnings about the risks associated with investing in crypto and taking enforcement action against firms that violate existing regulations.The new powers granted under the amendment will enable the FCA to further strengthen its oversight of the crypto sector.

FCA's Key Responsibilities:

Authorization of Crypto Firms: The FCA will assess applications from firms seeking to operate crypto businesses in the UK.
Supervision of Regulated Activities: The FCA will monitor the activities of authorized firms to ensure compliance with regulatory requirements.
Enforcement Action: The FCA will take enforcement action against firms that violate regulations, including issuing fines, imposing restrictions, and revoking authorizations.
Consumer Education: The FCA will provide educational resources to help consumers understand the risks and opportunities associated with cryptoassets.

Impact on Stablecoins: A Focus on Regulation

The amendment to the Financial Services and Markets Bill specifically addresses stablecoin regulation.This reflects the growing recognition of stablecoins as a potentially important part of the digital payments ecosystem, as well as the need to address the risks they pose to financial stability.

The bill empowers the FCA to regulate the issuance and use of stablecoins in the UK. Amendment to UK financial services bill provides regulation for crypto activitiesThis includes setting standards for reserve management, redemption rights, and operational resilience. The UK crypto regulatory landscape remains in a state of flux, but significant changes on the horizon promise to bring much-needed stability and clarity. This article examines the current state of UK crypto regulation, focusing on recent developments, such as the Financial Services and Markets Act 2025 and the proposed Property (Digital Assets) Bill. These changes are poised to reshape the wayThe goal is to ensure that stablecoins are backed by sufficient reserves, can be readily redeemed for their pegged currency, and are resilient to operational disruptions.

Key Considerations for Stablecoin Regulation:

Reserve Requirements: Stablecoin issuers will likely be required to hold reserves that are sufficient to cover all outstanding stablecoins.
Redemption Rights: Stablecoin holders will need to have clear and enforceable rights to redeem their stablecoins for the pegged currency.
Operational Resilience: Stablecoin issuers will need to have robust operational systems and controls to ensure the stability and reliability of their stablecoins.
Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF): Stablecoin issuers will need to comply with AML and CTF regulations to prevent the use of stablecoins for illicit activities.

UK Crypto Regulation: A Comparison with Global Approaches

The UK's approach to crypto regulation is evolving, and it's important to understand how it compares to other jurisdictions.While some countries have taken a more restrictive approach, the UK appears to be aiming for a balanced approach that fosters innovation while protecting consumers and maintaining financial stability.

For example, the European Union is implementing the Markets in Crypto Assets Regulation (MiCA), which aims to establish uniform EU crypto regulation.MiCA provides legal certainty for digital assets beyond the scope of current EU financial services legislation.

Key Differences and Similarities:

Scope of Regulation: The scope of crypto activities regulated varies across jurisdictions.Some countries focus primarily on AML/CTF, while others have broader regulatory frameworks covering a wider range of activities.
Licensing and Authorization: The requirements for obtaining licenses or authorizations to operate crypto businesses also vary significantly.
Consumer Protection: Consumer protection measures are a common focus across many jurisdictions, but the specific measures implemented may differ.
Innovation: Some jurisdictions are more focused on fostering innovation in the crypto sector, while others prioritize risk management and consumer protection.

Expert Opinions and Industry Perspectives

The proposed changes to UK crypto regulation have sparked considerable debate among industry experts and stakeholders. This would be done via amendments to the Financial Services and Markets Act 2025 (FSMA), the Financial Services and Markets Act 2025 (Regulated Activities) Order 2025 (RAO), the Financial Services and Markets Act 2025 (Financial Promotions) Order 2025, and the FCA Handbook.Some welcome the increased clarity and certainty that regulation will bring, while others express concerns about the potential for stifling innovation and driving businesses out of the UK.

Anna, a lawyer at CMS London and a member of the firm’s Crypto Digital Assets and Financial Services Regulation teams, highlights the importance of understanding the evolving regulatory landscape. An amendment to the Financial Services and Markets Bill now before the United Kingdom s parliament would extend the law s powers to regulate financial promotion and other activities toShe emphasizes the need for businesses to seek expert legal advice and proactively prepare for compliance.

Others have noted that the UK's approach to staking, which excludes it from the strict oversight of collective investment schemes, is a positive step that could encourage innovation in this area.

The Future of Crypto Regulation in the UK

The amendment to the Financial Services and Markets Bill is a significant step towards establishing a comprehensive regulatory framework for cryptoassets in the UK. The Financial Services and Markets Act 2025 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 - Draft SI PDF, 572 KB, 27 pages This file may not be suitable for usersHowever, the regulatory landscape is likely to continue evolving as the crypto sector matures and new technologies emerge.

Financial services firms should be prepared for ongoing regulatory change and should proactively engage with regulators and industry stakeholders to shape the future of crypto regulation in the UK.Staying informed about the latest developments and adapting to the changing regulatory environment will be crucial for success in the crypto space.

What to Expect in the Coming Years:

Further Refinement of Regulations: The FCA and HM Treasury will likely continue to refine the regulations based on experience and feedback from industry stakeholders.
Increased Enforcement Activity: As the regulatory framework becomes more established, the FCA is likely to increase its enforcement activity against firms that violate regulations.
International Coordination: International coordination on crypto regulation is likely to increase as countries grapple with the challenges of regulating a global asset class.
Focus on Emerging Technologies: Regulators will likely focus on emerging technologies in the crypto space, such as decentralized finance (DeFi) and non-fungible tokens (NFTs).

Frequently Asked Questions (FAQs) about UK Crypto Regulation

Here are some frequently asked questions about the amendment to the Financial Services and Markets Bill and its implications for crypto regulation in the UK:

What is the Financial Services and Markets Act 2025 (FSMA)?

The Financial Services and Markets Act 2025 (FSMA) is the core regulatory framework for financial services in the UK. In this issue we provide an update on the next steps for the UK Cryptoassets regulation. These publications provide the long-awaited direction of travel for the regulation of this sector, and even though the details are still to be confirmed, they provide some degree of clarity to the industry.It provides the legal basis for regulating a wide range of financial activities, including banking, insurance, and investment services.

What is the amendment to the Financial Services and Markets Bill?

The amendment to the Financial Services and Markets Bill extends the law's powers to regulate cryptoassets. The Markets in Crypto Assets Regulation, or MiCA, aims to establish uniform EU crypto regulation and provide legal certainty for digital assets beyond the scope of current EU financial services legislation. Speaking broadly, analysts expect the focus areas for 2025 to extend beyond the general trend of increased regulatory intensity.It empowers the FCA to regulate a wide range of crypto activities, including stablecoin issuance, crypto custody, and crypto financial promotions.

Who will be affected by the new regulations?

The new regulations will affect any firm that offers crypto services to UK retail customers, regardless of their location.This includes crypto exchanges, custodians, issuers of stablecoins, and platforms that facilitate crypto lending and borrowing.

What are the key requirements for crypto financial promotions?

Crypto financial promotions must be fair, clear, and not misleading. Financial services firms are used to seeing regulatory change, but 2025 promises to be a year in which the UK regulatory landscape evolves more than usual and can be expected to continue evolving beyond the end of this year.They must include clear and prominent risk warnings and present a fair and balanced view of the cryptoasset.

How can crypto businesses prepare for the new regulations?

Crypto businesses should assess their current operations, seek legal counsel, prepare for FCA authorization, review their risk management frameworks, develop compliance programs, and train their employees.

What is the role of the Financial Conduct Authority (FCA)?

The FCA is responsible for authorizing firms, supervising their activities, and enforcing compliance with regulatory requirements.It also provides educational resources to help consumers understand the risks and opportunities associated with cryptoassets.

Conclusion: Navigating the Evolving UK Crypto Landscape

The amendment to the UK Financial Services Bill marks a significant shift towards comprehensive regulation of crypto activities, designed to provide clarity, protect consumers, and foster innovation within a secure framework.By understanding the implications of the Financial Services and Markets Act 2025 (FSMA) and the upcoming regulations, businesses can proactively prepare for compliance, navigate the evolving landscape, and contribute to the growth of a responsible and sustainable crypto ecosystem in the UK. Financial Services and Markets Act 2025 (FSMA): core regulatory framework for UK financial services. Many crypto asset activities are expected to fall under its scope in the near future. FSMA 2025 Amendment: grants HM Treasury authority to regulate cryptoassets, marking a significant policy shift.While the UK crypto regulatory landscape remains in a state of flux, significant changes on the horizon promise to bring much-needed stability and clarity.As firms prepare for these changes, the UK is poised to become a leading hub for crypto innovation, backed by a robust regulatory framework. Firms serving or marketing to UK retail customers must be authorised in the UK, regardless of their location. Group structure: Businesses offering crypto services through separate entities may need to rethink how they manage risk, governance, and oversight across regulated and unregulated parts of the group.Key takeaways include:

Sweeping compliance changes are coming for crypto firms operating in the UK.
FCA authorization will be required for most crypto activities.
Financial promotions will be heavily scrutinized to protect consumers.
Stablecoins are a key focus of regulation.

It is essential to stay informed, seek expert advice, and adapt to the changing regulatory environment to thrive in the future of crypto in the UK. Amendment to UK financial services bill provides regulation for crypto activities cointelegraph.comNow is the time to take action and prepare your business for the new era of crypto regulation.Don't wait until it's too late. A regulatory update outlining the UK government's proposed framework to bring cryptoasset activities, including stablecoins and staking, under the Financial Services and Markets Act by the end of 2025.Start your compliance journey today!